Fourth Quarter Report 2007
Five Years of Discipline and Focus transcending into Record Profits and Setting the Platform for Explosive Growth AirAsia Berhad, Asia’s leading low-cost carrier and voted as the best Asian low cost airline by Skytrax for 2007, is pleased to announce the unaudited results for the fourth quarter and the full year ended 30 June 2007, and provide a review of recent notable events and achievements.
Tony Fernandes, Group Chief Executive Officer, said: “I am thrilled to announce our record fourth quarter and full year results. For the past five years, we have maintained unconditional focus and discipline to the low cost model. We are committed to the short-haul, no frills concept which has been proven successful all over the world. In the process, we have invested significantly to build a solid foundation and to create a platform for sustainable growth. We have built the AirAsia Academy to churn out high quality manpower to ensure seamless business growth. We constantly expand our route network and it is now the most dense in South East Asia. We are market leaders in almost all the routes we serve. We have also secured our growth pipeline with the purchase order of 200 Airbus A320 aircraft, it is almost impossible for any airline to purchase a new narrowbody aircraft as the production backlog is up to 2012. Our Malaysian operation now has the youngest fleet of any airline in South East Asia and we will get even younger going forward as we induct more Airbus A320 and phase out Boeing 737-300 from our fleet. Despite these heavy investments, our balance sheet is among the most liquid of any airline, the cash balance and aircraft deposits amounts to RM913 million. Furthermore, our aircraft assets is booked at RM3 billion – this is significantly lower than the current appraised market value. The market condition in the past five years was very challenging. We were competing against a state subsidised airline, the authorities were not familiar with the low cost concept, airports were hesitant to offer concessions and our brand recognition was in its infancy. Nonetheless we persisted, and now the investments and strategic planning are delivering positive result. In the financial year 2007, we have carried 14 million passengers across the Group, launched 19 new routes, opened up two new bases in Kota Kinabalu and Kuching, become the market leader for domestic Malaysia and we are the lowest cost airline in the world. We are excited about the future growth prospects of the Company. The Malaysia Government’s progressive decision to implement domestic rationalisation has allowed the industry to compete on the same basis. Government supports the low cost airline industry; there are three low cost terminals across the region and the Malaysian Government is planning to build a new Kuala Lumpur LCCT with a capacity of 30 million passengers per year – up from the current 10 million passengers per year. Our brand is the most recognisable ASEAN airline and this has aided with our efforts to penetrate new markets. These are competitive advantages that ensure sustainable profitable growth. AirAsia is the only LCC in the region making money and no other LCC in the region has a foundation as solid as ours. Revenue for the quarter was RM432 million, a growth of 38% compared to the same period last year. These results are achieved by 45% growth in passenger volumes driven by an 8% lower average ticket prices and producing a 43% increase in per pax ancillary spend. Load factor decreased by 2 percentage points to 81% largely due to the huge 42% capacity addition in the quarter. Despite the lower fares and load factor, yields (Rev / ASK) was 3% higher due to strong ancillary income contribution and a shorter stage length. Unit cost was relatively flat at US3.24 cents / ASK. This was a remarkable performance given that our unit fuel cost was 29% higher than the same period last year. The combination of higher yields with flat cost enabled us to deliver pretax income of RM130 million, eight times greater against last year’s restated pretax profit of RM14 million. The Directors have decided to change the financial year end to December beginning next financial year.
30 August 2007
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